Tuesday, September 21, 2010

There is no such thing as the Business Cycle

The concept of the business cycle is a joke. (I'm being serious.) It is an artifact of data collection. I'll bring a quarter to our SWEET scholars meeting and in less than 3 minutes show you what I mean. I don't really want to elaborate on my denial of the existence of "the business cycle", because I don't want everyone to get upset.

So instead, I'll just leave some random brain droppings here: You've probably heard the expression, "if you can measure it, you can manage it." In fact, a search of the US Patent & Trademark Office's web database shows that the phrase "If you can measure it, you can manage it" was registered under trademark protection by the Kinex AHA Corporation in March of 2000. I'd like to sue these guys, not for trademark infringement, but for 'logic infringement'.

It seems more likely to me (assertion without evidence, economics is full of them) that if you CAN'T measure something, you CAN'T manage it. Just because this negative relationship is true, it doesn't automatically make it true the other way around.

One nice thing that economics has given us, and Keynesian economics in particular, is the ability to more accurately measure various facets of the economy. This ability coupled with high self-esteem and ignorance, has led many people to believe that they are able to manage the economy. (Specifically the NON EXISTENT business cycle) I'd be surprised if they are able to even manage their own impulses, much less the entire economy. (Which is, if you think about it, the aggregated impulses of 6.7x10^9 people.)